Case Study Description of Novartis Venture Fund: Valuation Dilemmas
The Novartis Venture Fund is considering investing into a start up, Genedata, and must take into account the valuation analysis by both the start up as well as Venture Valuation -- an independent boutique organization that specializes in valuing high growth potential startups. NVF uses the Venture Valuation inputs to determine how best to structure the next round of financing for Genedata and the case requires the reader to discuss and analyze pricing, further financing requirements, and exit strategy for the fund.
Authors :: Benoit Leleux, Victoria Kemanian, Atul Pahwa, Katrin Siebenburger
Swot Analysis of "Novartis Venture Fund: Valuation Dilemmas" written by Benoit Leleux, Victoria Kemanian, Atul Pahwa, Katrin Siebenburger includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Genedata Valuation facing as an external strategic factors. Some of the topics covered in Novartis Venture Fund: Valuation Dilemmas case study are - Strategic Management Strategies, Financial analysis, Financial management and Organizational Development.
Some of the macro environment factors that can be used to understand the Novartis Venture Fund: Valuation Dilemmas casestudy better are - – supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, wage bills are increasing, increasing commodity prices, cloud computing is disrupting traditional business models, there is backlash against globalization, increasing government debt because of Covid-19 spendings,
banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Novartis Venture Fund: Valuation Dilemmas
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Novartis Venture Fund: Valuation Dilemmas case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Genedata Valuation, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Genedata Valuation operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Novartis Venture Fund: Valuation Dilemmas can be done for the following purposes –
1. Strategic planning using facts provided in Novartis Venture Fund: Valuation Dilemmas case study
2. Improving business portfolio management of Genedata Valuation
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Genedata Valuation
Strengths Novartis Venture Fund: Valuation Dilemmas | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Genedata Valuation in Novartis Venture Fund: Valuation Dilemmas Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Novartis Venture Fund: Valuation Dilemmas Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Ability to recruit top talent
– Genedata Valuation is one of the leading recruiters in the industry. Managers in the Novartis Venture Fund: Valuation Dilemmas are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– Genedata Valuation has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Novartis Venture Fund: Valuation Dilemmas HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Genedata Valuation is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Benoit Leleux, Victoria Kemanian, Atul Pahwa, Katrin Siebenburger can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Genedata Valuation digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Genedata Valuation has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Training and development
– Genedata Valuation has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Novartis Venture Fund: Valuation Dilemmas Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Cross disciplinary teams
– Horizontal connected teams at the Genedata Valuation are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
High brand equity
– Genedata Valuation has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Genedata Valuation to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Genedata Valuation is present in almost all the verticals within the industry. This has provided firm in Novartis Venture Fund: Valuation Dilemmas case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
High switching costs
– The high switching costs that Genedata Valuation has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Strong track record of project management
– Genedata Valuation is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Genedata Valuation has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Genedata Valuation has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Weaknesses Novartis Venture Fund: Valuation Dilemmas | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Novartis Venture Fund: Valuation Dilemmas are -
Capital Spending Reduction
– Even during the low interest decade, Genedata Valuation has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Novartis Venture Fund: Valuation Dilemmas, is just above the industry average. Genedata Valuation needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Novartis Venture Fund: Valuation Dilemmas, in the dynamic environment Genedata Valuation has struggled to respond to the nimble upstart competition. Genedata Valuation has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Genedata Valuation has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Novartis Venture Fund: Valuation Dilemmas should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Genedata Valuation products
– To increase the profitability and margins on the products, Genedata Valuation needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Novartis Venture Fund: Valuation Dilemmas HBR case study mentions - Genedata Valuation takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Aligning sales with marketing
– It come across in the case study Novartis Venture Fund: Valuation Dilemmas that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Novartis Venture Fund: Valuation Dilemmas can leverage the sales team experience to cultivate customer relationships as Genedata Valuation is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Novartis Venture Fund: Valuation Dilemmas, it seems that the employees of Genedata Valuation don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Low market penetration in new markets
– Outside its home market of Genedata Valuation, firm in the HBR case study Novartis Venture Fund: Valuation Dilemmas needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Genedata Valuation is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Novartis Venture Fund: Valuation Dilemmas can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
No frontier risks strategy
– After analyzing the HBR case study Novartis Venture Fund: Valuation Dilemmas, it seems that company is thinking about the frontier risks that can impact Organizational Development strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities Novartis Venture Fund: Valuation Dilemmas | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Novartis Venture Fund: Valuation Dilemmas are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Genedata Valuation can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Genedata Valuation can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Genedata Valuation can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Genedata Valuation can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Genedata Valuation in the consumer business. Now Genedata Valuation can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Genedata Valuation can develop new processes and procedures in Organizational Development industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Genedata Valuation can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Genedata Valuation to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Loyalty marketing
– Genedata Valuation has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Genedata Valuation is facing challenges because of the dominance of functional experts in the organization. Novartis Venture Fund: Valuation Dilemmas case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Better consumer reach
– The expansion of the 5G network will help Genedata Valuation to increase its market reach. Genedata Valuation will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Low interest rates
– Even though inflation is raising its head in most developed economies, Genedata Valuation can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Manufacturing automation
– Genedata Valuation can use the latest technology developments to improve its manufacturing and designing process in Organizational Development segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Leveraging digital technologies
– Genedata Valuation can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Threats Novartis Venture Fund: Valuation Dilemmas External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Novartis Venture Fund: Valuation Dilemmas are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Genedata Valuation can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Novartis Venture Fund: Valuation Dilemmas .
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Genedata Valuation in the Organizational Development sector and impact the bottomline of the organization.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Genedata Valuation.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Genedata Valuation business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Genedata Valuation demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Genedata Valuation can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing wage structure of Genedata Valuation
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Genedata Valuation.
Shortening product life cycle
– it is one of the major threat that Genedata Valuation is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Genedata Valuation has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Genedata Valuation needs to keep up with the evolution of technology in the Organizational Development sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Genedata Valuation will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Novartis Venture Fund: Valuation Dilemmas, Genedata Valuation may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Organizational Development .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Genedata Valuation in the Organizational Development industry. The Organizational Development industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Weighted SWOT Analysis of Novartis Venture Fund: Valuation Dilemmas Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Novartis Venture Fund: Valuation Dilemmas needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Novartis Venture Fund: Valuation Dilemmas is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Novartis Venture Fund: Valuation Dilemmas is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Novartis Venture Fund: Valuation Dilemmas is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Genedata Valuation needs to make to build a sustainable competitive advantage.